Even the most pessimistic expect the cuts to last for no longer than a quarter. Or two

Depending on who you ask, spends on rural marketing are either crashing with the exact same speed as they are in urban centres or have been left largely untouched. The people we spoke to were split evenly on this, with some of the marketers we reached out to including a couple of FMCGs and a prominent manufacturer of farm automation, unavailable for comment. According to Sandip Bansal, chief client and field officer, at GroupM’s Dialogue Factory, “Our clients have not told us to hold on or hold back. Perhaps it’s because the rural economy is more about FMCG and basic needs.” He believes it’s the urban poor, particularly migrants involved in areas like construction, that have been worse affected. On the other hand, Shekhar Banerjee, COO, Madison Media has a more pessimistic view: “With the short supply of cash, we are seeing advertisers significantly scaling down or postponing activity in short term. We are also observing much lower participation from consumers in any rural promotions.”

Blame it on an ecosystem of suppliers and local promoters who have traditionally relied on cash. According to rural marketing experts, many of them have come under the ambit of banking, over the last few years. However, low liquidity is having a definite impact on at least some rural marketing programmes.

Bansal admits to a slowdown, but adds that even Rs 50,000 (the weekly withdrawal limit for businesses with current accounts) goes a long way in the hinterlands. Dentsu Aegis, chairman and CEO, South Asia Ashish Bhasin acknowledges a negative effect in the short run, but doesn’t anticipate these disruptions lasting for much longer than a quarter or two. “Mid to long term will be positive. At the moment, a shortage of currency is a problem, since unlike in cities, banks are quite far away and a person could waste a full day on a visit to the nearest branch.” He, however, anticipates a full revival and a stronger than this year festive season for 2017.

The experts believe the rural consumer is more resilient

The rural poor according to the experts have never had a particularly easy life which paradoxically helps them tide over such crisis situations with a greater degree of equanimity. They are relying on social ties, borrowing, bartering to overcome the temporary shortage of cash. Says Bhasin, “More than brands stepping in to help, an informal system of trust has taken over. Trade got paralysed when demonetisation happened, but from then to today, you can see a reasonable recovery as credit or IOU systems start taking over.” What could put this under pressure though is the lack of actual hard cash in smaller denomination notes. Given their scarcity, spending and therefore access to currency is coming down.

It will compel BFSI to go rural in a big way

And that could lead to something of a windfall for rural marketing specialists. Pratap Bose, founder, The Social Street, believes “BFSI will be the biggest spender as they are the ones flush with cash.” He foresees big budgets allocated to Tier II and III towns, since with recent policies, being banked has become a prerequisite. This might take some time, though, since many of these firms currently have their hands full dealing with their existing clientele and servicing urban demand. But according to some industry estimates, by September next year, the infrastructure to enable these transactions will have been set up across the country. At which point promoting individual brands and educating potential and current customers will become a priority.

Some players in this space like DHFL claim home loan demand remains intact in Tier II and III markets. Says Sevantika Bhandari – senior vice president and head marketing, DHFL, “DHFL’s ATL and BTL promotions in these markets have garnered a positive response. Home buying is an important long-term life decision which won’t be delayed or postponed due to changes in economic or market conditions.”